Domestic trade in fourth quarter down 8.3%

THE domestic trade in goods fell 8.3% year on year by value in the fourth quarter, the Philippine Statistics Authority (PSA) reported on Monday.

According to preliminary data from the PSA’s Commodity Flow in the Philippines report, the value of goods traded in the three months to December fell to P162.74 billion.

A year earlier, domestic trade grew 6.6%. In the third quarter, growth was 51.5%.

Domestic trade by value is the outflow value of commodities transported from the place of origin to the place of destination, the PSA said.

By volume, trade in the fourth quarter declined 23.8% to 4.29 million tons. The growth rate in the third quarter had been 19.6%.

In the third quarter, volume was a revised 6.10 million tons. The year-earlier tally was 5.63 million tons a year earlier.

Commodity flow includes goods transported by water, air, and rail, with waterborne goods the dominant segment.

Emilio S. Neri, Jr., chief economist at Bank of the Philippine Islands, said that weather disturbances coupled with economic developments in the last three months of 2022 could have been factors.

“We think a combination of bad weather, the peso’s rapid depreciation and resulting tightness in foreign exchange regulations in (October and November), combined with aggressive rate hikes were the key reasons for the decline in commodity flows in (the fourth quarter),” he said in an e-mail.

The central bank has hiked interest rates by a cumulative 400 basis points since May 2022, bringing the policy rate to a 16-year high of 6%. This was in response to inflation accelerating to 8.1% in December.

Of the 10 commodity groups monitored by the PSA, trade in seven commodities contracted by value.

These were miscellaneous manufactured articles (-78.5%); chemicals and related products (-56.1%); commodities and transactions not classified elsewhere in the PSCC (-49.6%); crude materials, inedible, except fuels (-39.8%); manufactured goods classified chiefly by material (-27.3%); food and live animals (-6.8%) and beverages and tobacco (-2.3%).

The three commodity groups posting growth were animal and vegetable oils (54.5%), machinery and transport equipment (31.9%) and mineral fuels, lubricants, and related materials (25.8%).

The machinery and transport equipment category accounted for the highest value of traded commodities at P64.44 billion, or a 39.6% share of the total. This was followed by food and live animals at P34.32 billion (21.1%) and manufactured goods classified chiefly by material at P27.21 billion (16.7%).

Central Visayas accounted for the most goods traded by value with outflows amounting to P40.49 billion and inflows of P34.10 billion, resulting in a surplus of P6.39 billion.

Caraga posted an inflow value of P34.77 billion or 21.4% of the total. The region also posted the biggest trade deficit of P29.46 billion.

Eastern Visayas registered the highest trade balance in the last three months of 2022 at P19.10 billion on outflows of P31.69 billion. This was followed by Northern Mindanao with a P13.69 billion trade balance on outflows of P25.76 billion.

Central Luzon’s trade balance was P11.88 billion on outflows of P13.23 billion.

“With relatively better weather conditions, lower global commodity prices, a more stable (peso) and slower increases in interest rate, we expect an improvement in flows in (the first quarter of 2023),” Mr. Neri said.

Higher transport costs and disrupted logistics likely remained a challenge during this quarter, he added. — Abigail Marie P. Yraola